The Tamil Nadu Authority of Advance Ruling (AAR) has held that the MRF cannot practice cross-charging common ITC and the distribution through ISD-mechanism is mandatory from April 2025.
The bench of C.Thiyagarajan and B.Suseel Kumar has observed that MRF’s practice of receiving the invoices, from vendors pertaining to common input services, in the name of MRF HO and raising invoices in the name of their ISD registration and distributing the common credit to the various branches/States is not consistent with the legal position from 1st April 2025.
The applicant MRF Limited is the leading manufacturer of automobile Tyres and Tubes and allied products in the State of Tamil Nadu. Besides manufacturing units in the State of Tamil Nadu, MRF is also having units in the States of Telengana, Kerala, Goa, Gujarat and Union Territory of Puducherry.
The applicant sought the advance ruling on the issue whether the Applicant can comply with the amended provision of section 2(61) and section 20 of the CGST Act, 2017 as amended by notification 16/2024-Central tax dated 6th August 2024 by following the procedure as stated at para 12 a) to 12 d) of the statement of containing applicant’s interpretation of law (Annexure ‘E’) in terms of Rule 54(IA) of the CGST Rules, 2017.
Yet another issue raised was whether the Applicant can continue to receive the Input Service Invoices issued by the Service Provider/Supplier of Service for the Common Input Service (Which are attributable to one or more State in the name of and addressed to Applicant’s Regular Registration and subsequently transfer the same in terms of Rule 54(IA) of CGST Rules, 2017 to MRF HO ISD Registration for subsequent distribution of the common Input Tax Credit through ISD Mechanism?
The AAR noted that the amendment carried out in Section 11 of the Finance Act, (8 of 2024), 2024, has defined the Input Service Distributor as one who receives invoices of the input services and distributes the credit of such input invoices as prescribed under Section 20 of CGST Act, 2017. Amendment carried out in Section 12 of the Finance Act, (8 of 2024), 2024, has amended Section 20 of CGST Act, 2017 wherein the receiver of common input service invoices shall be required to be registered as Input Service Distributor and thereby distribute the credit of such common input service to the branches. The said amendment was notified as coming into force from I st day of April 2025 vide Notification no.16/2024-Central Tax dated 06.08 .2024 .
The AAR held that with the amendment to Section 2(61) and Section 20 of the CGST Act, 2017 being made effective from 1st April 2025 vide Notification No.16/2024-Central Tax dated 06.08.2024, following the procedure for receiving and distribution of common input services in terms of Rule 54(IA) of the CGST Rules, 2017 is not consistent with the legal position from 1st April 2025.
The AAR ruled that the applicant (MRF) cannot continue to receive the Input Service Invoices issued by the Service Provider/Supplier of Service for the Common Input Service in the name ‘of and addressed to Applicant’s Regular Registration and subsequently transfer the same in terms of Rule 54(IA) of CGST Rules, 2017 to MRF HO ISD Registration for subsequent distribution of the common Input Tax Credit through ISD Mechanism.
Ruling Details
Applicant’s Name: MRF LIMITED
Ruling Date: 2025-09-02
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